CME loses bid to dismiss members' case

In a court battle instigated by some of its long-time futures exchange members, CME Group lost an early round today when a judge refused to dismiss the case.

Cook County Circuit Court Judge Mary Mikva ruled against the futures exchange operator by rejecting its motion to compel arbitration. Allowing arbitration would have sidelined the case.

The long-time exchange members filed the case last year, alleging their rights as class B shareholders of the Chicago-based company have been diminished in connection with CME operational changes related to its Globex electronic trading platform. They say their superior and free access to the exchange was eroded when the company moved its main trading engine from Chicago to Aurora in 2012. They're seeking hundreds of millions of dollars in damages in the breach-of-contract case, according to the complaint.

A spokeswoman for CME declined to comment on the ruling.

The traders, some of whom started with the exchange in the 1970s, won their B shareholder privileges when the Chicago Board of Trade and the Chicago Mercantile Exchange demutualized and distributed shares to seat members in the 2000s on the way to becoming one merged, publicly company under the CME banner.

Mikva said in her ruling that the exchange rule on which CME based its push for arbitration of the case didn't apply to this situation. “If Rule 578.C. is read in the context of the Exchange Rules as a whole and of Rule 578 in particular, it is clear that Rule 578.C. has no application to this dispute,” she wrote. “Moreover, if the language that the defendants rely on in Rule 578.C. meant what defendants contend it means, Rule 578 would significantly alter Plaintiffs' substantive core rights, which, according to the Charters, is impossible without the Class B shareholders' consent.”

The case, filed by Sheldon Langer, Ronald Yermack and Lance Goldberg, seeks class action status on behalf of class B shareholders, but they haven't attained certification yet. A status hearing in the case is scheduled for May 1. Plaintiffs hope the case makes it to trial by next year, said Steve Morrissey, a lawyer with Susman Godfrey who is representing the shareholders.

CME sought to move the case to federal court last year, but a judge there sent it back to state court. A separate lawsuit against the company by floor traders settled last year.